Gte North , Inc. v. John G. Strand

*The Honorable John Feikens, United States District Judge for the
Eastern District of Michigan, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0141P (6th Cir.)
File Name: 00a0141p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
GTE NORTH , INC.,
Plaintiff-Appellant,
v.
J OHN G. S TRAND , et al.,
Defendants-Appellees.
;>

1
No. 98-1851
Appeal from the United States District Court
for the Western District of Michigan at Lansing.
No. 98-00038—Robert Holmes Bell, District Judge.
Argued: December 13, 1999
Decided and Filed: April 20, 2000
Before: BOGGS and NORRIS, Circuit Judges; and
FEIKENS, District Judge.*
_________________
COUNSEL
ARGUED: Patrick F. Philbin, KIRKLAND & ELLIS,
Washington, D.C., for Appellant. David A. Voges, OFFICE
OF THE ATTORNEY GENERAL, PUBLIC SERVICE

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2 GTE North, Inc. v. Strand, et al. No. 98-1851
DIVISION, Lansing, Michigan, for Appellees. Charles W.
Scarborough, UNITED STATES DEPARTMENT OF
JUSTICE, CIVIL DIVISION, Washington, D.C., for
Intervenors. ON BRIEF: Patrick F. Philbin, KIRKLAND &
ELLIS, Washington, D.C., for Appellant. David A. Voges,
Henry J. Boynton, OFFICE OF THE ATTORNEY
GENERAL, PUBLIC SERVICE DIVISION, Lansing,
Michigan, for Appellees. Charles W. Scarborough, UNITED
STATES DEPARTMENT OF JUSTICE, CIVIL DIVISION,
Washington, D.C., for Intervenors. Stephen F. Smith, David
L. Lawson, Peter D. Keisler, SIDLEY & AUSTIN,
Washington, D.C., for Amici Curiae.
_________________
OPINION
_________________
BOGGS, Circuit Judge. GTE North, Inc. (GTE), an
incumbent local telecommunications carrier in Michigan,
sued the defendants, members of the Michigan Public Service
Commission (MPSC or the Commission), under the Federal
Telecommunications Act of 1996 (FTA or the Act) after the
Commission issued an opinion and order directing GTE to (1)
publish tariffs in which GTE would offer to sell elements of
its telecommunications network at rates predetermined by the
Commission, and (2) allow competitors to purchase pre-
assembled platforms of GTE network elements. In its
complaint, GTE alleged that the MPSC’s order conflicted
with, and was preempted by, the FTA, and that enforcement
of the order infringed GTE’s statutory rights in violation of 42
U.S.C. § 1983.
GTE moved for summary judgment, and the defendants
filed a cross-motion to dismiss for lack of subject matter
jurisdiction. The district court granted the defendants’ motion
and dismissed the case without prejudice, holding that it did
not have jurisdiction to review the MPSC’s order under
42 U.S.C. § 252(e)(6), the FTA provision limiting federal
judicial review of state commission orders approving or
rejecting final interconnection agreements, because the
No. 98-1851 GTE North, Inc. v. Strand, et al. 23
where the agency rule or action giving rise to the controversy is final and
not contingent upon future uncertainties or intervening agency action.
Ibid. The hardship prong concerns the extent of the burden imposed on
the petitioner who would be compelled to act under threat of enforcement
of the challenged law. See id. at 153.
In this case, the district court must decide whether the ripeness
inquiry demands that one of GTE’s competitors actually request access at
the tariff rate before deciding the case, or whether the order itself gives
rise to a justiciable claim because it imposes an immediate obligation on
GTE to sell network elements at predetermined rates.
by affirming state commissions’ statutory role and rejecting
an unduly expansive interpretation of § 252(e)(6) that would
permit state regulatory authorities to insulate from federal
review orders alleged to be contrary to, or preempted by,
federal law.

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22 GTE North, Inc. v. Strand, et al. No. 98-1851
7To determine whether a claim is ripe for decision, the reviewing
court must consider both the “fitness of the issues for judicial decision
and the hardship to the parties of withholding court consideration.”
Abbott Laboratories v. Gardner, 387 U.S. 136, 149 (1967), overruled on
other grounds by Califano v. Sanders, 430 U.S. 99 (1977). A case is “fit
for judicial decision” where the issues raised are purely legal ones and
established in the February 25 order against GTE. The
challenged order was the product not of § 252 proceedings,
but of proceedings initiated by the MPSC under Michigan
law, and as such may be independently enforced by the
Michigan courts. The district court therefore erred in
concluding that § 252(e)(6) provides an adequate opportunity
for deferred review under either Califano or Thunder Basin.
It is presumably because § 252(e)(6) does not provide GTE
with an adequate assurance of federal review that the MPSC
does not seriously defend on appeal the district court’s
conclusion that §252(e)(6) satisfies Thunder Basin because it
defers, but does not preclude, federal review. Rather, the
MPSC argues that “there is neither a need nor a requirement
for the federal District Court to review [the February 25
order]” because that order is fully reviewable in Michigan
state court. Although this argument may be relevant to the
question whether the district court should abstain from
deciding GTE’s claims at this time, see Romine v.
CompuServe Corp., 160 F.3d 337, 340–41 (6th Cir. 1998), it
is wholly irrelevant to the question whether the court has
jurisdiction to hear GTE’s federal preemption challenges to a
state commission order entered in a non-FTA proceeding.
In upholding jurisdiction over GTE’s claims under § 1331,
we emphasize that it is precisely because state utility
commissions play such a critical role in administering the
FTA’s regulatory framework that they must operate strictly
within the confines of the statute. We therefore REVERSE
the district court’s ruling, uphold its jurisdiction under
§ 1331, and remand the case for determination on the merits
if and when the district court finds GTE’s claims ripe for
review.7 In so doing, we hope to further the goals of the FTA
No. 98-1851 GTE North, Inc. v. Strand, et al. 3
challenged directive was merely an interlocutory order. See
42 U.S.C. § 252(e)(6) (1996). GTE timely appealed the
district court’s decision to this court.
Based on the language and legislative history of
§ 252(e)(6), we conclude that the limitations on federal
review set forth in that provision do not apply in this case, and
that the district court has general federal question jurisdiction
under 28 U.S.C. § 1331 to hear GTE’s challenge to the
February order.
I
Before addressing the basis for the district court’s
jurisdiction over GTE’s claims, it is necessary briefly to
describe the administrative context in which the MPSC issued
the challenged order. In the spring of 1996, AT&T and Sprint
attempted to negotiate an interconnection agreement with
GTE pursuant to § 251 of the FTA. Congress passed the Act
in 1996 in an effort to promote competition in local telephone
markets by ending regulated monopolies previously enjoyed
by incumbent local exchange carriers (LECs) such as GTE.
Before Congress enacted the FTA, state public utility
commissions regulated local telecommunications markets by
granting companies that incurred the expense of establishing
local networks the exclusive right to provide service in the
areas covered by their systems. In exchange for this privilege,
LECs allowed the state commissions to regulate local service
rates. The FTA altered this practice and addressed the
underlying problem of anti-competitive local
telecommunications markets in two ways: it preempted state
commissions’ authority to grant service monopolies, and
obligated incumbent LECs to provide competitors with
network access.
Although the FTA circumscribes state commissions’ power
to regulate local markets, it does not exclude state
commissions from the FTA approval process. To the
contrary, it invests them with authority to approve or reject
interconnection agreements negotiated in accordance with the
Act, which requires LECs to permit rival carriers to: (1)

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4 GTE North, Inc. v. Strand, et al. No. 98-1851
utilize the LEC’s network and facilities; (2) purchase
unbundled network elements from the LEC; and (3) purchase
at wholesale rates any telecommunications service that the
LEC provides at retail to subscribers who are not
telecommunications carriers. See 47 U.S.C. §251(c)(2)-(4)
(1996); see also id. § 252 (establishing procedures for
negotiation, arbitration, and approval of interconnection
agreements). To facilitate new competitors’ entry into local
markets, the FTA outlines specific procedures that LECs and
new market entrants must follow in negotiating, arbitrating,
and approving interconnection agreements. See generally id.
§252 (1996). LECs and their competitors may negotiate
interconnection agreements voluntarily, through mediation, or
through compulsory arbitration before a state utility
commission. See id. § 252(a)-(b) (1996). When a final
agreement is reached, the telecommunications or public utility
commission for the state in which the LEC is located must
approve or reject the agreement. See id. § 252(e) (1996).
Once a state commission rules on a proposed agreement,
Section 252(e)(6), the FTA provision at issue in this case,
authorizes any aggrieved party to “bring an action in an
appropriate Federal district court to determine whether the
agreement . . . meets the requirements of section 251.” Id.
§ 252(e)(6) (1996). If a state commission fails to approve or
reject a proposed agreement within a certain time – 30 days
from the date of submission if the agreement resulted from
compulsory arbitration, or 90 days from the date submitted if
the agreement resulted from voluntary negotiation or
mediation – the Federal Communications Commission (FCC)
may preempt the state commission’s jurisdiction and rule on
the validity of the agreement. See id. § 252(e)(4) - (5) (1996).
In this case, AT&T and Sprint petitioned the MPSC for
compulsory arbitration under § 252 when the negotiations
they began with GTE in 1996 did not produce an agreement.
In March 1997, before a final agreement was reached, GTE
filed a complaint in federal district court alleging that an order
issued by the MPSC on January 15, 1997, concerning GTE’s
interconnection obligations to Sprint and AT&T violated the
No. 98-1851 GTE North, Inc. v. Strand, et al. 21
6GTE was prudent to sue the Michigan commissioners under
Ex parte Young because it is virtually certain that a state utility
commission’s decision to accept regulatory authority under the FTA
cannot legitimately be construed as a valid waiver of sovereign immunity.
The Supreme Court’s recent decisions in College Savings Bank v. Florida
Prepaid Postsecondary Education Expense Bd., 119 S. Ct. 2199, and
Florida Prepaid Postsecondary Education Expense Bd. v. College
Savings Bank, 119 S. Ct. 2219 (1999), undermine earlier circuit court
decisions holding that the Eleventh Amendment does not bar suits against
state utility commissions because such commissions constructively waive
their immunity from suit by participating in the regulatory scheme
established by the FTA. See, e.g., MCI Telecommunications Corp. v.
Illinois Commerce Comm’n, 183 F.3d 567, 567-68 (7th Cir. 1999)
(granting a petition for rehearing and directing the parties to file
supplemental briefs on the impact that the Supreme Court’s decisions in
Alden v. Maine, 119 S. Ct. 2240 (1999), and the College Savings Bank
cases had on the court’s earlier decision).
It is precisely because the waiver doctrine no longer provides a
reliable basis for seeking relief against state commissions that we
disagreed in Michigan Bell Telephone Co. v. Climax Telephone Co., 202
F.3d 862 (6th Cir. 2000), with the Seventh Circuit’s decision in MCI and
premised our conclusion that the plaintiff could proceed with its suit
against the MPSC solely on Ex parte Young, rather than waiver, grounds.
to prospective injunctive relief, waiting to decide this case
until the Commission approves a final agreement
incorporating the challenged terms may well deny GTE a
timely and adequate remedy by precluding recovery for harm
sustained while the order was in effect.6
For the foregoing reasons, abstention is not warranted in
this case.
IV
In holding that GTE’s claims fell within the purview of
§ 252(e)(6), the district court effectively denied GTE any
assurance of federal review because under § 252(e)(6), federal
review is wholly contingent on a state commission’s decision
to approve or reject a final interconnection agreement
incorporating the terms of any challenged order, an event that
need not occur for a competitor to enforce the tariffs

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20 GTE North, Inc. v. Strand, et al. No. 98-1851
the rule that only exceptional circumstances justify
[abstention]”). Because the MPSC’s February order cannot
be described as “judicial” in nature, Younger does not require
this court to abstain from ruling on the merits of GTE’s
claims. See id. at 371 (holding that a “judicial inquiry
investigates, declares and enforces liabilities as they stand on
present or past facts and under laws supposed already to
exist,” and concluding that the “establishment of a rate is the
making of a rule for the future, and therefore is an act
legislative and not judicial in kind”). Indeed, Younger
abstention would be especially inappropriate in this case
because the Michigan Court of Appeals has already
considered and rejected the merits of GTE’s challenge to the
MPSC’s 1997 orders. See GTE North, Inc. v. MPSC, No.
198324 (unpublished opinion, December 30, 1997) (affirming
over GTE’s objection the rates established in the MPSC’s
order in case U-10860 and affirming the MPSC’s directive to
conduct the cost study proceedings that gave rise to the
dispute in this case).
Finally, the district court is not required to abstain from
deciding this case under the Johnson Act, which prohibits
federal courts from enjoining compliance with state orders
affecting rates charged by a public utility only when, among
other things, “[j]urisdiction is based solely on diversity of
citizenship or repugnance of the order to the Federal
Constitution.” 28 U.S.C. § 1342 (1994). The Johnson Act
does not require abstention in this case because jurisdiction
over GTE’s claims is based on alleged violations of its rights
under the FTA.
In addition to the fact that the requirements for abstention
established by the Supreme Court are not satisfied in this
case, abstention is not warranted here because waiting to
review the propriety of the February 25 order until it is
incorporated into a final arbitration agreement will deny GTE
a timely and adequate remedy at law. GTE, whose suit
against the MPSC is based on Ex parte Young, 209 U.S. 123
(1908), cannot recover damages for injuries sustained under
the challenged order. Because Young limits GTE’s recovery
No. 98-1851 GTE North, Inc. v. Strand, et al. 5
FTA. The district court dismissed GTE’s complaint, holding
that it did not have subject matter jurisdiction to review the
challenged order because it was not an order approving or
rejecting a final interconnection agreement. See GTE North
v. Strand, No. 5:97-CV-20 (W.D. Mich. June 2, 1997) (citing
47 U.S.C. § 252(e)(6)).
Then, while arbitration proceedings between GTE, Sprint,
and AT&T were still pending, the MPSC initiated unrelated
state law proceedings against GTE and other incumbent LECs
in order to establish terms of interconnection to Michigan
local exchange networks generally. These proceedings
concerned GTE as an LEC, but not specifically as a party to
the AT&T and Sprint arbitration. In connection with these
general interconnection proceedings, the MPSC required GTE
and Ameritech, as Michigan LECs, to file with the
Commission “Total Service Long Run Incremental Cost”
(TSLRIC) studies for both regulated and non-regulated
telecommunications services. In addition, the MPSC directed
GTE to publish tariffs in which GTE would offer to sell its
network elements and wholesale services to any interested
party at rates predetermined by the Commission. GTE
responded to the Commission’s order by filing a petition for
rehearing in which GTE challenged the MPSC’s rates for
unbundled loops as confiscatory in violation of the FTA. The
MPSC denied GTE’s petition for rehearing, and GTE
appealed the MPSC’s order to the Michigan Court of
Appeals. On December 30, 1997, the court affirmed the
MSPC’s order, and the MPSC proceeded to use GTE’s and
Ameritech’s TSLRIC studies to determine prices for new
entrants’ access to bundled and unbundled network elements
and basic local exchange services throughout Michigan.
On February 25, 1998, in the course of the state
proceedings against GTE and Ameritech, the MPSC issued
the order contested in this appeal. In the February 25 order,
the MPSC used GTE’s TSLRIC studies to establish the rates
at which GTE would be compelled to sell unbundled network
elements to its competitors. In addition, the order stated that
the FTA requirement that GTE allow competitors to access

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6 GTE North, Inc. v. Strand, et al. No. 98-1851
pieces, or unbundled elements, of GTE’s local network did
not preclude GTE’s competitors from requesting access to
pre-assembled, fully operational local service platforms.
Upon receiving the order, GTE sued the MPSC in the district
court, alleging that the Commission, acting pursuant to
Michigan law, violated the FTA when it issued the February
25 order: (1) directing GTE to provide competitors with
access to pre-assembled, fully operational service platforms;
and (2) requiring GTE to publish tariffs offering to sell
elements of its network at rates predetermined by the
Commission.
In its motion for summary judgment, GTE argued that the
Commission’s mandate directing GTE to provide competitors
with access to pre-assembled network platforms violated
§ 251(c)(3) of the FTA because that provision requires LECs
to provide competitors with access only to “unbundled
network elements.” 47 U.S.C. § 251(c)(3) (1996) (emphasis
added). According to GTE, Congress deliberately limited
incumbent LECs’ obligation to grant competitors network
access by requiring LECs to provide competitors only with
“unbundled,” or separated, network elements that the new
carrier would have to assemble before it could provide
service. Ibid. In addition, GTE argued that the portion of the
February order directing it to offer pre-assembled platforms
to all potential competitors violated the FTA because the Act
specifically states that only competitors who request
unbundled access (“requesting carriers”) are entitled to
network access under § 251(c)(3), and then only after
negotiating individual interconnection agreements. See ibid.
GTE made a similar argument in challenging the MPSC’s
second directive, which, according to GTE, violates the FTA
because it requires LECs to publish tariffs offering to sell
network elements to all interested competitors at
predetermined rates even though §§ 251 and 252 of the Act
No. 98-1851 GTE North, Inc. v. Strand, et al. 19
Pullman abstention is similarly inappropriate because
Pullman abstention is warranted only when a state law is
challenged and resolution by the state of certain questions of
state law may obviate the federal claims, or when the
challenged law is susceptible of a construction by state courts
that would eliminate the need to reach the federal question.
See, e.g., Babbit v. United Farm Workers National Union,
442 U.S. 289, 306 (1979) (interpreting Pullman). In this case,
to abstain pending state review of GTE’s claims would be
inappropriate because the dictates of the Michigan
Telecommunications Act (pursuant to which the MPSC
issued the challenged order) are clear and the MPSC has
already considered GTE’s objections to the February 25 order,
denied them, and denied GTE’s request for rehearing.
Younger abstention is also inappropriate. In Younger, the
Supreme Court held that federal courts should abstain from
deciding cases within their jurisdiction only when: (1) there
are ongoing state court proceedings; (2) those proceedings
involve important state interests; and (3) the parties have an
adequate opportunity to raise constitutional issues in the state
proceedings. See GTE MobileNet of Ohio v. Johnson, 111
F.3d 469, 481 (6th Cir. 1997). The MPSC contends that all
three conditions for Younger abstention are met, and
emphasizes that state proceedings are currently ongoing
despite the Michigan courts’ rejection of GTE’s claims
because GTE has a right pursuant to Mich. Comp. Laws
§ 462.26 to seek review of the Commission’s February 25
order (and the Commission’s May 11, 1998, order denying
rehearing) in the Michigan Court of Appeals.
That GTE has a right to appeal does not, however, satisfy
the requirement that a federal court may abstain under
Younger only if the parties are involved in ongoing state
proceedings. The Supreme Court held in NOPSI that the
availability, or even the pendency, of state court review of a
“legislative or executive action” does not justify Younger
abstention. NOPSI, 491 U.S. at 368 (noting that requiring
abstention in deference to state judicial proceedings reviewing
“legislative or executive action” would “make a mockery of

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18 GTE North, Inc. v. Strand, et al. No. 98-1851
express an opinion on the merits of GTE’s claims, but not on
the grounds urged by the defendants. Although the Michigan
courts have concurrent jurisdiction over GTE’s § 1983 and
preemption claims, we should decline to decide this case only
if the requirements for abstention established in Burford v.
Sun Oil Co., 319 U.S. 315 (1943), Younger v. Harris, 401
U.S. 37 (1971), or Railroad Comm’n of Texas v. Pullman Co.,
312 U.S. 496 (1941), are met, or if abstention is warranted
under the Johnson Act, 28 U.S.C. § 1342 (1994).
Burford abstention is appropriate where “timely and
adequate state-court review is available” and:
(1) when there are difficult questions of state law bearing
on policy problems of substantial public import whose
importance transcends the result in the case then at bar;
or
(2) where the exercise of federal review of the question
in a case and in similar cases would be disruptive of state
efforts to establish a coherent policy with respect to a
matter of substantial public concern.
New Orleans Public Service, Inc. v. Council of the City of
New Orleans, 491 U.S. 350, 361 (1989) (NOPSI). Although
the MPSC was arguably trying to establish a “coherent
policy” concerning local interconnection rates, Michigan state
law clearly authorizes the dictates in the Commission’s
February 25 order. Because Congress has invested the federal
courts with primary responsibility for adjudicating FTA
challenges to state telecommunications regulations, and
because this case does not concern a disputed issue of state
law, but rather a potential conflict between state and federal
telecommunications laws, Burford abstention is inappropriate.
See, e.g., NOPSI, 491 U.S. at 361 (holding Burford abstention
inappropriate because the plaintiffs’ case did not “involve a
state-law claim, nor even an assertion that the federal claims
are in any way entangled in a skein of state law that must be
untangled before the federal case can proceed”) (internal
quotation marks and citation omitted).
No. 98-1851 GTE North, Inc. v. Strand, et al. 7
1Although GTE claims that it will be disadvantaged if its competitors
are not required to negotiate individual terms of network access, any harm
GTE may suffer on this score will arguably be temporary because
universal subsidies are due to be phased out under the FTA. Cf. AT&T
Corp. v. Iowa Utilities Bd., 119 S. Ct. 721, 737 (1999) (upholding an FCC
rule that the plaintiffs said would “eviscerate the distinction between
resale and unbundled access” and amount to “government-sanctioned
arbitrage” on the grounds that the rule was consistent with the FTA, and
noting that, because Ҥ 254 requires that universal service subsidies be
phased out, . . . whatever possibility of arbitrage remains will be only
temporary”).
The counter-argument is, of course, that even if the tariffing
requirement established in the February 25 order were struck down once
the Commission approved an agreement incorporating the terms set forth
in the tariffs, GTE could not recover damages for harm suffered in the
interim, nor could it “turn back the clock and recreate the atmosphere of
negotiations that would have prevailed if [its competitors] had not been
operating for months under tariffing arrangements.” Appellant’s Br. at
24-25.
specifically require competitors to negotiate individual terms
of access with LECs.1 See 47 U.S.C. § 252(c)(2)-(3) (1996).
Although GTE’s claims raise interesting questions about
the scope and applicability of certain provisions of the FTA,
the district court did not address these arguments on the
merits because it determined that it lacked jurisdiction under
§ 252(e)(6) to review the MPSC’s February 25 order. In its
July 1998 ruling, the court dismissed GTE’s claims for
declaratory and injunctive relief on the basis that § 252(e)(6)
precludes federal review where a state commission has not yet
issued a final order approving or rejecting an interconnection
agreement. GTE argues on appeal that the district court erred
in dismissing the case for lack of subject matter jurisdiction
because the district court had general jurisdiction under 28
U.S.C. § 1331 to hear GTE’s claims. In deciding this appeal,
we express no opinion on the merits of GTE’s claims and
determine only whether the district court has jurisdiction to
entertain GTE’s challenge to the February 25 order.

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8 GTE North, Inc. v. Strand, et al. No. 98-1851
II
This court reviews de novo the district court’s denial of
GTE’s motion for summary judgment. See Greene v. Reeves,
80 F.3d 1101, 1104 (6th Cir. 1996). We also review de novo
the district court’s decision to dismiss GTE’s complaint for
lack of subject matter jurisdiction. See Anderson v. Liberty
Lobby Inc., 477 U.S. 242, 249, 252 (1986); Musson
Theatrical, Inc. v. Federal Express Corp., 89 F.3d 1244, 1248
(6th Cir. 1996). Lack of subject matter jurisdiction is an
affirmative defense that a defendant may assert in a motion to
dismiss. See Fed. R. Civ. P. 12(b)(1); In re DeLorean Motor
Co., 991 F.2d 1236, 1240 (6th Cir. 1993) (emphasizing that
to survive a motion to dismiss, a complaint must contain
“either direct or indirect allegations respecting all material
elements to sustain a recovery under some viable legal
theory”).
The party opposing dismissal has the burden of proving
subject matter jurisdiction. See Moir v. Greater Cleveland
Reg’l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990).
Specifically, the non-moving party must show that the
complaint “alleges a claim under federal law, and that the
claim is ‘substantial.’” Musson Theatrical, Inc. v. Federal
Express Corp., 89 F.3d 1244, 1248 (6th Cir. 1996) (holding
that a complaint is “substantial” unless “prior decisions
inescapably render [it] frivolous”). That is to say, the non-
moving party will survive the motion to dismiss by showing
“any arguable basis in law” for the claims set forth in the
complaint. Ibid. In conducting our review, we “construe the
complaint in a light most favorable to the plaintiff, accept as
true all of plaintiff’s well-pleaded factual allegations, and
determine whether the plaintiff can prove no set of facts
supporting [his] claims that would entitle him to relief.”
Ludwig v. Board of Trustees of Ferris State Univ., 123 F.3d
404, 408 (6th Cir. 1997). We review for clear error any
factual findings the district court made in deciding the motion
to dismiss. See Gafford v. General Elec. Co., 997 F.2d 150,
161 (6th Cir. 1993).
No. 98-1851 GTE North, Inc. v. Strand, et al. 17
5 In Iowa, the Supreme Court reversed the Eighth Circuit’s decision
vacating, as inconsistent with the private negotiation provisions of the
FTA, the FCC’s “pick-and-choose” rule, which required incumbents to
offer network access to any potential competitor on the same terms
enjoyed by earlier competitors who negotiated individual agreements with
the incumbent. The Eighth Circuit vacated the rule on the basis that it
allowed late market entrants to obtain the benefits of previous
competitors’ agreements without having to accept the trade-offs that the
initial competitors had to make in order to obtain favorable terms of
access. See id. at 738. In reversing the Eighth Circuit and upholding the
rule, the Supreme Court rejected the argument that the rule undercut
incumbents’ bargaining power and contravened the purpose of the
negotiation provisions of the FTA, and affirmed the FCC’s authority to
promulgate the rule on the basis that it tracked the language of a particular
FTA provision (§ 252(i)) “almost exactly.”
In the same opinion, the Supreme Court also reversed the Eighth
Circuit’s decision vacating FCC Rule 315(b), which prohibits incumbent
LECs from separating already combined network elements before leasing
them to competitors under the “unbundled access” provisions of the FTA.
The Eighth Circuit determined that the rule should be vacated because it
required leased access to “bundled” elements, in violation of the FTA.
The Supreme Court disagreed, finding that, although § 251(c)(3) directs
incumbents to grant competitors access to “unbundled” elements that the
competitors may then “combine” and thus “forbid[s] incumbents to
sabotage network elements that are provided in discrete pieces,”
§ 251(c)(3) “does not say, or even remotely imply, that elements must be
provided only in this fashion and never in combined form.” Iowa, 119 S.
Ct. at 737. Noting that Ҥ 251(c)(3) is ambiguous on whether leased
network elements may or must be separated,” the Court concluded that the
FCC’s rule, which effectively requires incumbents to lease “bundled”
elements to competitors under certain circumstances, “is entirely rational”
even though the rule “could allow entrants access to an entire
preassembled network.” Id. at 737–38.
Court in AT&T Corp. v. Iowa Utilities Bd., 119 S. Ct. 721
(1999).5
III
The MPSC argues that, even if we have jurisdiction over
GTE’s claims, it would be prudent for us to abstain from
ruling on the merits of the case until the rates specified in the
February 25 order are incorporated into an interconnection
agreement approved by the Commission. We decline to

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16 GTE North, Inc. v. Strand, et al. No. 98-1851
preemption challenges to state commission orders issued in
non-FTA proceedings.
Indeed, to hold to the contrary would have enormous
negative implications: if only certain actions (final orders
approving interconnection agreements) by state commissions
are reviewable in federal court, and if, as the district court
held, § 252(e)(6) is the exclusive basis for judicial review of
state commission actions that in any way relate to
interconnection agreements, state commissions may insulate
regulatory requirements that violate the FTA from federal,
and possibly even state, court review. This interpretation of
§ 252(e)(6) conflicts with Congress’s decision to establish
federal procedures for negotiating interconnection rights and
to concentrate judicial review of interconnection agreements
in the federal courts. It is also antithetical to the principle that
parties injured by a governmental entity’s failure to adhere to
the law may seek redress in the courts. Finally, denying
review and forcing GTE either to violate the February 25
order, or to comply with the general and immediate
obligations imposed by the order in the hope that the order
would one day be incorporated into a reviewable final
agreement, would undermine both the letter and spirit of the
FTA.
Section 252(e)(6) circumscribes federal review only of
cases born of § 252 proceedings. Because the MPSC’s
February 25 order was not the product of § 252 arbitration,
but of an independent state law proceeding, § 252(e)(6) does
not preclude jurisdiction over GTE’s claims. We therefore
hold that federal review is available under § 1331 to
determine whether state commission orders violate federal
law except in cases in which the challenged regulatory action
is clearly an interlocutory order arising out of § 252
proceedings. We confine our holding to the jurisdictional
question because it is for the district court to determine on
remand whether the directives in the February 25 order violate
§ 252 of the FTA as recently interpreted by the Supreme
No. 98-1851 GTE North, Inc. v. Strand, et al. 9
2Section 261 of the FTA provides that state commissions can impose
their own rules “in fulfilling requirements of this part, if such regulations
are not inconsistent with the provisions of [the FTA].” 47 U.S.C. § 261
(1996). State commissions may also impose additional requirements on
LECs if such requirements “are necessary to further competition in the
provision of telephone exchange access, so long as the State’s
requirements are not inconsistent with the [Federal Communication]
Commission’s regulations to implement this part.” Id. § 261 (b)-(c).
3See 47 U.S.C. §§ 251(a)(1), 251(c)(1) (requiring incumbents and
their competitors to negotiate in good faith the specific terms and
conditions of interconnection agreements).
Jurisdiction Over the Challenged Order
Based on the scope of the applicable statutory provisions
and the nature of the challenged order, we conclude that the
district court has general jurisdiction pursuant to 28 U.S.C.
§ 1331 to hear GTE’s claims. Section 252(e)(6), which
prohibits federal review of interlocutory orders entered in the
course of FTA proceedings, plainly does not preclude review
of the February 25 order, which was entered in an
independent state law proceeding unrelated to the
AT&T–Sprint arbitration. Moreover, even if one could
interpret § 252(e)(6) to encompass GTE’s claims, to do so
would frustrate Congress’s intent by allowing state
commissions to insulate from federal review decisions
allegedly preempted by, or otherwise contrary to, federal
telecommunications law. We therefore reverse the district
court’s order dismissing GTE’s complaint, but express no
opinion on whether the order directing GTE to sell pre-
assembled platforms and other network elements at
predetermined rates is preempted by the FTA.2 We similarly
express no opinion on whether the portion of the February 25
order directing GTE to sell network elements to any interested
competitor at rates predetermined by the Commission is
preempted by the FTA requirement that competitors obtain
access to local networks by negotiating individual
interconnection agreements.3

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10 GTE North, Inc. v. Strand, et al. No. 98-1851
To survive a motion to dismiss based on lack of federal
question jurisdiction, the non-moving party must show first
that its claims arise under federal law and, second, that § 1331
jurisdiction is not “preempted by a more specific statutory
provision conferring exclusive jurisdiction elsewhere.”
Connors v. Amax Coal Co., 858 F.2d 1226, 1229-30 (7th Cir.
1988). GTE asserts that the district court has subject matter
jurisdiction over its 42 U.S.C. § 1983 and federal preemption
claims because: (1) such claims arise under the Constitution
and laws of the United States; and (2) the MPSC’s
February 25 order, which the parties agree was issued
pursuant to Michigan law, deprives GTE of its rights under
the FTA, thereby creating a cause of action for prospective
injunctive relief against the commissioners under 42 U.S.C.
§ 1983 and Ex parte Young, 209 U.S. 123 (1908). We agree.
Because GTE’s claims arise under federal law, the district
court has jurisdiction under § 1331 to decide the case unless
GTE’s claims are subject to the limitations on federal review
set forth in § 252(e)(6), which we conclude they are not. See
47 U.S.C. § 252(e)(6) (1996); Shaw v. Delta Air Lines, Inc.,
463 U.S. 85, 96 n.14 (1983) (holding that a plaintiff who
“seeks injunctive relief from a state [or local] regulation on
the ground that such regulation is preempted by federal law
. . . presents a federal question which the federal courts have
jurisdiction under 28 U.S.C. § 1331 to resolve”). Federal
question jurisdiction over GTE’s claims is not preempted by
the FTA because § 252(e)(6) only circumscribes federal
judicial review of interlocutory orders issued in FTA, not state
law, proceedings. See Connors, 858 F.2d at 1229–30.
The text and legislative history of the FTA make clear that
§ 252(e)(6) is the exclusive basis for federal judicial review
only of orders entered in negotiation or arbitration
proceedings under § 252 of the Act. Section 252(e)(6)
provides that, “[i]n any case in which a State commission
makes a determination under this section, any party aggrieved
by such determination may bring an action in an appropriate
federal district court to determine whether the agreement or
statement meets the requirements of section 251 of this title
No. 98-1851 GTE North, Inc. v. Strand, et al. 15
state courts to defer to the MPSC].” Id. at 654. Because an
interested buyer need not incorporate the terms of the
February 25 order into a final arbitration agreement to enforce
GTE’s obligations under the order, § 252(e)(6) does not
provide an “adequate procedure” by which GTE may obtain
review of the MPSC’s directives. That GTE could contest the
validity of the February 25 order in the course of defending a
state court enforcement proceeding does not solve the
problem, because leaving resolution of GTE’s claims to the
state courts would clearly frustrate Congress’s goals under the
FTA. See, e.g., MFS Intelenet, 16 F. Supp. 2d. at 823–34
(concluding that review of § 252 “as a whole” demonstrates
that “Congress has created a unique framework which, while
inviting state commissions to arbitrate and approve
interconnection agreements, retains exclusive jurisdiction
within the federal courts to ensure that those agreements meet
federal requirements”).
The district court has subject matter jurisdiction under
§ 1331 to review federal preemption claims. See Bibbo v.
Dean Witter Reynolds, Inc., 151 F.3d 559 (6th Cir. 1998).
The question in this case is simply whether § 252(e)(6)
divests the district court of its jurisdiction over GTE’s
preemption claims because the February 25 order, though
itself a product of state law proceedings, establishes rates that
might one day be incorporated into final arbitration
agreements approved by the MPSC. There is no evidence that
Congress intended § 252(e)(6), which grants federal courts
exclusive jurisdiction to review for FTA compliance state
commission orders approving or rejecting interconnection
agreements, to preclude federal review of state law orders that
permit telecommunications carriers to circumvent the
procedures prescribed in the FTA for negotiating network
access. We recognize, of course, that the significance of the
challenged order’s state law origins has engendered legitimate
debate among the parties and in the district court. However,
absent clear evidence that Congress intended to allow state
commissions to issue orders that may be enforced without
being incorporated into final interconnection agreements, we
will not construe § 252(e)(6) to preclude federal review of

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14 GTE North, Inc. v. Strand, et al. No. 98-1851
agreement was so strong as to eliminate the contingency and
virtually guarantee judicial review.
We disagree, and find that in this case § 252(e)(6) cannot
be relied upon to provide adequate federal review because
there is a chance, regardless how small, that GTE’s
competitors may obtain service from GTE on the terms set
forth in the February 25 order without ever executing a final
agreement. Indeed, we think the appropriate inquiry is not
whether, in the court’s estimation, it is more likely than not
that the challenged order will be incorporated into a
reviewable agreement, but whether there is any possibility at
all that an LEC’s competitors could enforce the terms of the
challenged order by means other than those prescribed in the
FTA. If there is such a chance, § 252(e)(6) does not provide
the party challenging the order with adequate review under
Califano, and the federal district courts have general
jurisdiction to review the order under 28 U.S.C. § 1331.
Under Michigan law, a buyer interested in purchasing
network elements from GTE at the rates established in the
February order need not execute a final interconnection
agreement with GTE to enforce the tariff; it need only petition
a state court for an injunction enforcing the terms of the tariff
against GTE. See, e.g., Rinaldo’s Construction Corp. v.
Michigan Bell Telephone Co., 559 N.W.2d 647, 653–54
(Mich. 1997). In Rinaldo’s, the Michigan Supreme Court
held:
[W]here a plaintiff seeks relief against a telephone
company in a [state] court of general jurisdiction, under
Valentine [v. Michigan Bell, 199 N.W.2d 182 (Mich.
1972)], the court may entertain (1) a cause of action in
tort, or (2) a claim that the telephone company has
violated the regulatory code or tariffs.
Id. at 653–54 (emphasis added). As the Michigan Supreme
Court went on to explain, “[c]auses of action in tort and those
causes of action alleging that a telephone company has
violated the tariffs or code are not cases in which the rationale
underlying the doctrine of primary jurisdiction [requires the
No. 98-1851 GTE North, Inc. v. Strand, et al. 11
4In Strand, the district court noted that an MPSC order is a
“determination” subject to federal review under section 252(e)(6) only if
the order approves or rejects a final interconnection agreement. See
Strand, 1997 WL 811422, at *2 (quoting GTE South v. Morrison, 957 F.
Supp. 800, 804 (E.D. Va. 1997)).
and this section.” 47 U.S.C. § 252(e)(6) (1996) (emphasis
added). Because the MPSC initiated the state law
proceedings that resulted in the challenged order independent
of the procedures prescribed in the FTA, § 252(e)(6) does not
limit federal judicial review of the February 25 order, and the
MPSC’s failure, thus far, to incorporate the terms of the order
in a final decision approving or rejecting an interconnection
agreement does not bar review of GTE’s claims.
In holding that GTE’s suit was premature because the
MPSC had yet to issue a final order reviewable under
§ 252(e)(6), the district court relied heavily on its prior
decision in GTE North v. Strand, No. 5:97CV01, 1997 WL
811422 (W.D. Mich.),4 and in so doing failed to recognize the
legal significance of the February 25 order’s state law origins.
As the district court implicitly acknowledged in Michigan
Bell Telephone Co. v. MFS Intelenet of Michigan, Inc., 16 F.
Supp. 2d 817, 823 (W.D. Mich. 1998), Strand stands for the
limited proposition that federal district courts have “no
jurisdiction to review MPSC decisions arising during the
§ 252 process until after [an] interconnection agreement ha[s]
become final by way of commission approval or rejection.”
Ibid. (citing cases) (emphasis added). The court in MFS thus
distinguished Strand and upheld jurisdiction over the
plaintiff’s challenge to an MPSC order interpreting (rather
than approving or rejecting) an existing interconnection
agreement. See id. at 823-24; cf. Michigan Bell Telephone v.
Strand, 26 F. Supp. 2d 993, 999 (W.D. Mich. 1998)
(emphasizing the “Congressionally assigned role of the
district courts in preventing violations of the
Telecommunications Act flowing from enforcement decisions
or other decisions inconsistent with existing interconnection
agreements”). In this case, as in MFS, the challenged order
did not arise “during the § 252 process,” and is therefore not

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12 GTE North, Inc. v. Strand, et al. No. 98-1851
subject to the reasoning in Strand or the many other cases
cited by the lower court in which district judges have refused
to review interlocutory orders issued by state commissions in
the course of § 252 arbitrations. Id. at 823.
Although the order at issue in this case is clearly
distinguishable from an interlocutory order entered in a § 252
proceeding, the commissioners urge us to overlook the order’s
state law origins because the order establishes rates that the
parties agree will likely be incorporated in a final agreement
subject to review under § 252(e)(6). Were we to adopt this
approach, we would simply equate the February 25 order with
an interlocutory order in a § 252 proceeding that GTE could
not challenge in federal court until the Commission issued a
final decision approving or rejecting an agreement
incorporating the terms of the order. Recharacterizing the
February 25 order in this manner appears consistent with the
FTA if one reads § 252(e)(6) broadly to govern not only
claims that a state utility commission erred in approving a
final agreement negotiated under § 252, but also claims that
the commission violated the FTA by approving an agreement
that was not the product of a § 252 proceeding. Although this
construction of § 252(e)(6) is superficially appealing, we
cannot adopt this approach and assume that GTE would
eventually be able to seek federal review of the challenged
order because any approach that equates a decision arising out
of independent state law proceedings with an interlocutory
order in a § 252 arbitration ignores the critical fact that the
former may be enforced against the parties even if it is never
incorporated in a final interconnection agreement.
At first blush, § 252(e)(6) seems to guarantee adequate,
albeit deferred, judicial review of the Commission’s
February 25 order. See, e.g., Thunder Basin Coal v. Reich,
510 U.S. 200 (1994) (holding that a statutory provision that
places temporal restrictions on a party’s ability to bring an
action in federal court still provides adequate opportunity for
review and therefore satisfies due process). As the district
court noted in its opinion, the parties agree that the rates
established in the Commission’s February 25 order will likely
No. 98-1851 GTE North, Inc. v. Strand, et al. 13
be incorporated into a final arbitration agreement. Standing
alone, this admission appears to undercut GTE’s argument
that the district court has jurisdiction over its claims under
§ 1331. Indeed, when combined with the Commission’s
assertion that it has been prevented from ruling on an
agreement incorporating the challenged terms because GTE
has not made certain filings, the parties’ admission virtually
guarantees that, if GTE were to execute an agreement, either
the MPSC or the FCC would approve or reject the terms of
the challenged order, at which point GTE could seek federal
review under § 252(e)(6). See 47 U.S.C. § 252(e)(1) (1996)
(stating that a state commission “shall” approve or reject
“any” interconnection agreement between an incumbent and
a requesting carrier, whether the agreement is the product of
voluntary negotiation or binding arbitration before the state
commission). The problem with this logic, and the reason
§ 252(e)(6) does not provide for adequate review of the
challenged order under Califano v. Sanders, 430 U.S. 99, 108
(1977), or even under Thunder Basin, 510 U.S. 200 (1994), is
that an interested buyer could enforce the tariffs established
in the February order in the Michigan courts without ever
executing a final interconnection agreement with GTE.
In determining whether the lower court has jurisdiction
over GTE’s claims despite the limitations in § 252(e)(6), this
court must look “not only [to] the particular statutory
language, but to the design of the [FTA] as a whole and to its
object and policy.” Crandon v. United States, 494 U.S. 152,
158 (1990). Citing the Supreme Court’s decision in Califano,
the district court correctly observed that, “[w]here Congress
has provided an adequate procedure to obtain review of an
agency determination, alternative bases for jurisdiction are
inapplicable.” Califano, 430 U.S. at 108. The district court
noted in its opinion that confining federal review of GTE’s
claims to the circumstances outlined in § 252(e)(6) might
theoretically deprive GTE of “adequate” review under
Califano because such review would be contingent upon the
MPSC’s approval of a final agreement incorporating the
February 25 order. However, the court found that the
probability that the order would be incorporated into a final

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